Victor J. Blue | Bloomberg | Getty Images
Entrance doors stand locked before opening hours at a Sears Holdings Corp. store on Black Friday at the Newport Centre Mall in Jersey City, New Jersey.
For months, there’s been a steady stream of store closure announcements from Sears, Bon-Ton, J.C. Penney and other retailers. And while mall and shopping center owners appear to be holding their own at the moment, that could soon change, with another wave of closures expected in 2019.
Gap, Express and Victoria’s Secret owner L Brands have already hinted at more closures. And the fate of Sears is still largely uncertain, as the bankrupt department store chain could ultimately liquidate. That would mean hundreds more Sears and Kmart stores going dark, in addition to the more than 100 locations the company is already in the process of shuttering.
The average mall rent increased 0.2 percent during the fourth quarter after dropping 0.3 percent during the prior period, Reis said. That means landlords were able to bring in higher-paying tenants. Many mall owners have already cited success in replacing Sears with more profitable businesses — and now increasingly apartments, hotels and co-working spaces. Denham added that fitness companies, trampoline parks and grocery stores have also been more active in opening new locations of late.
The U.S. cities with the highest retail rent growth during the latest quarter included Orlando, Raleigh-Durham, Austin and Richmond, according to Reis data. Those with the biggest declines included Salt Lake City and Cleveland.
“If the retail sector was able to sustain the store closures over the last year, it can survive anything,” Denham said.